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What Could Move the Markets Next?
By Advisor Perspectives
Markets are not too expensive, or too cheap. As Russ explains, that offers a clue into what could cause the next move.
Stock markets have been more wobbly of late. While the proximate cause was an unexpected deterioration (collapse?) in trade talks with China, many investors were getting nervous even before the most recent barrage of tweets. Some were understandably skeptical of a rally that took U.S. equity indexes up 25% in four months. The skepticism was further compounded by the fact that the rally was entirely driven by multiple expansion, i.e. paying more for a dollar of earnings.
Given this dynamic, and apart from any trade risks, have stocks simply become too expensive? Surprisingly, the answer is not necessarily.
Read more at Advisor Perspectives.
Photo: Tsahi Levent-Levi